Euro$ interest rate futures rebounded Euro$ interest rate futures rebounded to highs of the week at the rate complex remains bullish relative to the diminished prospects on stocks, while the approaching FOMC meeting next week appears to be a low hurdle given fragile markets and an abundantly cautious Fed. The December 2015 contract is a half-tick lower near 99.445 (0.555% implied vs 0.570% Monday), while the deferreds are 1-2.5 ticks firmer out the back-end. Lean Friday holiday conditions should prevail quickly after the PMI and housing data round.

10:00 EDT

U.S. Markit flash PMI inched up to53.8 in July U.S. Markit flash PMI inched up to53.8 in July after slipping to 53.6 in June (the lowest print since October 2013) from May's 54.0. The index was at 55.8 a year ago. New orders rose to 55.0 from 54.7, while employment dipped to its lowest level since April versus June's 55.5. Cost inflation remained subdued. The data reflect solid improvement in the manufacturing sector. The data may weigh on Treasuries a bit as the market was worried that the report could disappoint, as was the case with Chinese and European results.

U.S. New Home Sales Preview U.S. New Home Sales Preview: June data on new home sales should reveal a 1.1% decline to a 540k (median 549k) pace from the 546k pace in May which set a new recent high. Other housing indicators have generally improved for the month with starts rising to 1,174k from 1,069k in May, existing home sales rising to 5.490 M from 5.320 M and the NAHB Index up to 60 from 54.

09:30 EDT

U.S. Markit manufacturing flash PMI U.S. Markit manufacturing flash PMI is forecast to sink slightly to 53.5 in July from 53.6 in June. For more detail on the data, see the Markit website.

Treasury Option Action: some early bullish positioning Treasury Option Action: some early bullish positioning included purchases of September 126.5 calls in a couple of tranches totaling 1k, accompanied by an uptick in volatility. September 10-year futures are 4.5-ticks firmer near 126-245 with the grain of this demand, compared to a 126-255 to 126-175 range on Globex overnight. Meanwhile, stocks continue to equivocate ahead of the open.

N.Y. FX Outlook N.Y. FX Outlook: Weaker PMI data were the overnight story, as China and EU manufacturing readings came in under market expectations, Global equities were mixed on the results however, with U.S. stock futures indicating a higher Wall Street open, largely on the back of Amazon's better earning report. EUR-USD fell back into 1.0920 from Thursday highs over 1.10135, as USD-JPT maintained a narrow range on either side of 124.00. USD-CAD matched the September 2, 2004 high of 1.3071, as oil prices stayed under $49/bbl, and as gold touched new five-plus year lows near $1,1076/ounce, and copper fell to six-year low near $2.35/lb. The U.S. calendar reveals the July flash Markit PMI at 9:45 EDT, followed by June new home sales at 10:00 EDT.